Excise taxes and pricing activities of e-liquid products sold in online vape shops

Abstract

BackgroundAlthough e-cigarette excise taxes have great potential to prevent the initiation and escalation of e-cigarette use, little information is available on pricing activities of online vape shops, and how well taxation is implemented during web-based sales remains unclear.ObjectivesWe examine e-liquid pricing activities in popular online vape shops that sell nationwide in the USA and present how those stores charge excise taxes based on shipping addresses in states and local jurisdictions that have e-cigarette taxation in place.MethodsWe collect e-liquid sales prices from five online vape shops using web data extraction, standardise prices for e-liquid products, and present e-liquid price distribution in the whole sample and in each store, as well as variations of excise taxes across states/local jurisdictions and between stores. The price data were scraped from the store websites from February to May in 2021.ResultsWe collected data on 14 477 e-liquid products from five stores. The average price of e-liquids is $0.25/mL, and the median price is $0.20/mL in our sample. E-liquid products sold online are very affordable and the average prices are lower compared with price estimates using other sources (eg, self-reports, sales data). In addition, online stores charge state excise taxes inconsistently and fail to comply with county-level or city-level excise taxes.ConclusionE-liquid products sold online are priced low, and stricter enforcement of e-cigarette excise tax is needed in online purchasing channels.

How do users compare the costs between nicotine vaping products and cigarettes? Findings from the 2016–2020 International Tobacco Control United States surveys

“…Products sold in vape shops and online stores may not bear the same tax pass-through rates in prices. In fact, growing evidence suggests that the products sold in online stores are priced much lower compared to products sold at brick-and-mortar stores and that state and local excise taxes on NVPs were not collected consistently at checkout [14].…”

“…For example, JUUL has stated that one JUUL pod is equivalent to a pack of 20 cigarettes. However, this is a rough estimate that could vary by consumer use patterns and product types [10,14]. In this context, there is an evidence gap in the tobacco tax literature, which, therefore, has rarely investigated how consumers and potential consumers perceive the cost comparison between NVPs and cigarettes, especially those adult smokers and NVP users who would benefit from differential taxes that may subsequently lead to complete transitions from cigarettes to NVPs or using NVPs to stay abstinent.…”

How Complete Are Tobacco Sales Data? Assessing the Comprehensiveness of Tobacco Product Retail Sales Data Through Comparisons to Excise Tax Collections

“…Moreover, the share of ENDS sales represented by monetary value may be even higher than estimates by volume since the per-unit cost of a milliliter of e-liquid purchased from mainstream retailers is much higher than that of e-liquid purchased in a vape shop. 10 The introduction of the PACT Act, however, was associated with increases in ENDS tax collections alongside decreases in retail sales data coverage of that market. The increase in tax revenue without concomitant increases in retail sales data might be explained if some consumers who previously purchased ENDS products on the internet substituted towards brick-and-mortar retailers not covered by IRI and Nielsen, such as vape shops and tobacconists.…”

Price Promotions of E-Liquid Products Sold in Online Stores

“…Given that online stores do not pay for expenses associated with a physical location and may have lower operational costs than brick-and-mortar stores, price promotions may further boost their competitiveness in the market. Indeed, our prior study shows that the average price of e-liquid sold in online stores was lower than the prices reported in surveys and sales data [ 26 ].…”